Pakistan to purchase LNG cargo from Qatar through spot buying

ISLAMABAD-Pakistan will purchase LNG cargo from Qatar through spot buying at 16.3 percent of Brent, for a window in February, which is higher than 13.37 percent the country is purchasing under long term agreement with Doha..

After refusal from Emirates National Oil Company (ENOC), the government had floated emergency tender for the procurement of one LNG cargo from spot market and in response to that two bids were received, said a source. Against tender for one cargo, two suppliers including Vitol and Qatar have offered bids for two different window in February. Vitol has offered 19.5 percent of Brent for February 21-22 window, while Qatar has offered 16.3 percent of Brent for February 25-26, a source told The Nation. The Vitol’s bid has been rejected, said the source. 

The Qatar bid is approximately 22% lower than the price offered by Emirates National Oil Company (ENOC) that withdrew its bid earlier for same cargo, said a spokesman for the Petroleum Division. Under long term agreement Pakistan is procuring LNG from Qatar at 13.37 of Brent. The spokesman said that LNG procuring company, Pakistan LNG Limited has arranged one more LNG cargo at a lower price for the month of February 2021 through an urgent tender. The price is approximately 22% lower than the price of the bidder that withdrew its bid earlier for same cargo.

It is worth mentioning here that on November 28, 2020, PLL had advertised a tender for procurement of two spot LNG cargoes for delivery in February. The bids were opened on December 28 and the first spot cargo for February 15-16 was awarded to SOCAR Trading UK Ltd, said a PLL statement. The SOCAR offered 23.4 percent of Brent or $11.48 per MMBTU for February 15-16. The second spot cargo for February 23-24 was awarded to lowest bidder Emirates National Oil Company (ENOC). ENOC had offered 20.9 percent of Brent or $ 10.22 per MMBTU. However ENOC later expressed its inability to make delivery as per the bid. PLL had approached the 2nd and 3rd lowest bidders within the bid validity period, but they regretted to deliver the cargo at the prices they had offered in their respective bids. The PLL in a statement had said that this bid default of the suppliers is associated with the recent supply shortages leading to high price volatility in the spot market coupled with extra buying in North Asia. 

PLL is taking all measures available under law and PLL’s tender process, including forfeiture of bid bonds, against the bidder(s) who failed to supply cargo as per their bids, said the PLL spokesman in a statement. February being a low demand month, Pakistan has imported 7.75 cargoes in the month of February, on average, in the last four years. After the completion of bidding for another cargo, total of 9 cargoes are secured for February.